- Ellison asks for leniency, citing cooperation and responsibility in FTX’s downfall.
- Her testimony was key in Sam Bankman-Fried’s trial and FTX’s fraud case.
- A $12.7 billion FTX-CFTC settlement includes $8.7 billion for defrauded investors.
Caroline Ellison, Sam Bankman-Fried’s former partner and ex-CEO of Alameda Research, is seeking leniency in the FTX collapse case. She argues that her cooperation during the trial, including three days of testimony, be taken favorably to spare her from imprisonment.
Ellison’s lawyers highlighted her “immediate and complete acceptance of responsibility” in a memo filed in a Manhattan court. They further argued that she poses no threat to public safety and shouldn’t face incarceration.
During the trial, Ellison’s testimony proved crucial in the case against Bankman-Fried. She revealed how he directed her to manipulate Alameda’s balance sheet and make risky investments with customer funds.
Ellison, along with four other senior FTX executives, pleaded guilty to charges related to the exchange’s collapse. In contrast, Ryan Salame, another former FTX executive who didn’t cooperate with prosecutors, received a 7.5-year prison sentence.
FTX Settlement and The SEC Scrutiny
FTX, co-founded by Bankman-Fried and Gary Wang, filed for bankruptcy in 2022 following revelations of fraud. In December 2022, the Commodity Futures Trading Commission (CFTC) took legal action against Alameda Research, its sister firm.
Read also: FTX Repayment Plan in SEC Crosshairs, Stablecoin Use Questioned
After a 19-month legal battle, FTX reached a $12.7 billion settlement with the CFTC, including $8.7 billion in restitution for defrauded investors. The now-defunct exchange also rolled out a reorganization plan to compensate creditors, with smaller claimants expected to receive a 118% return.
Meanwhile, the SEC is now reviewing payments made to creditors during FTX’s downfall, facing criticism for its failure to detect the fraud earlier. Critics argue this oversight raises questions about the agency’s effectiveness.
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